Has anyone noticed the increase in the number of articles lately relating to doctors and their pensions? One of the more recent headlines this April was the British Medical Association warning the Chancellor that senior doctors would have to cut their NHS working hours if the recent changes to pension tax legislation were not changed. Consultants’ leader Dr Rob Harwood said: “It cannot be right that doctors working extra hours to reduce waiting lists or cover rota gaps are then hit with additional tax bills greater than the value of the extra hours worked.”
We see the anxiety that doctors face over this on a regular basis.
Over the past eight years or so there has been pressure for the Government to be seen to be limiting the amount that individuals can both have or save into a pension. This has led to a large number of changes in tax pension legislation and, to be honest, it has been difficult to keep up! Perhaps the most immediate and I would argue, most punitive, was the recent change to the Annual Allowance, which kicked in during the 16/17 tax year. In our office there was much head scratching to understand how the new rules would work in practice but, once we got our heads around it, we started to see 1. how difficult it was to control and 2. how a large number of our clients would be affected and have higher tax liabilities.
In addition to the complicated calculation, there is a further difficulty relating to the timing and provision of information from NHS Pensions. Often individuals are under the impression that if their taxable income isn’t over £150,000 they aren’t affected. If you have taxable income of £110,000 or above you need to get details of the growth for that particular tax year from NHS Pensions. They may not send it out to you automatically so you need to call them and ask – it takes up to 12 weeks for them to provide it to you so make sure you do this in plenty of time.
For GP’s though, your information is typically a couple of years behind so you may need to look at the historical growth and put an estimate on your return. You can ask the Scheme to Pay if the likely tax is over £2,000 and if you don’t know you can make an estimate by completing a Scheme Pays Election form – for the 17/18 tax year these need to be with NHS Pensions by 31 July 2019.
If you are concerned about this or any aspect of your pension and financial planning, please get in touch